Panama Canal Award Upheld by US Court of Appeal

24th Aug 2023

A US Appeals Court has upheld an ICC Award, worth US$285 million, finding for the Panama Canal Authority (ACP). The challenge was brought by the Grupo Unidos por el Canal (GUPC) consortium, who argued that the arbitrators in this long-running dispute had shown evident partiality.

In its judgment, handed down on the 18th August 2023, the 11th Circuit Appeals Court confirmed the legitimacy of the earlier arbitral proceedings, and 2021 judgment from the Southern District of Florida which upheld the award. It agreed with the ICC which had also rejected the challenge.

The court held “Because we agree with the International Court of Arbitration and the district court that Grupo Unidos has presented nothing that comes near the high threshold required for vacatur, we affirm the denial of vacatur and the confirmation of the awards.”

The awards in this dispute concerned a number of elements including the basalt on site used to make aggregate, the concrete mix design, the foundation conditions and the contract terms concerning on-site testing laboratories. Many elements of the disputes had previously been through the Dispute Adjudication Board (DAB). The ACP claimed sums that it had paid the Contractor, GUPC, pursuant to the DAB rulings. GUPC claimed sums for issues it had lost at the DAB, as well as additional sums for issues it had won at the DAB. The awards found in favour of the ACP on the major issues of the basalt used to make aggregate and concrete mix design as well as rejecting GUPC’s shareholders’ claims for return on investment. The ACP was awarded the sum of US$284,740,310.63, inclusive of costs. The awards found in favour of GUPC on some of the issues relating to foundation conditions and in relation to the on-site laboratories. GUPC was awarded the sum of US$12,919,008.93 in costs in respect of those issues. GUPC was required to pay ACP a net sum of US$271,821,301.70.

The challenge to the awards was based on alleged partiality of the arbitrators as a result of common place professional interactions between them, or between them and individuals representing the ACP, including Manus McMullan KC. The Appeal Court found none of the interactions troublesome. It held, “We refuse to grant vacatur simply because these people worked together elsewhere. The record reveals no evidence of actual bias in the Panama 1 Arbitration. And as to possible bias, Grupo Unidos has established only that some of the arbitration’s participants were otherwise familiar with each other, and “familiarity due to confluent areas of expertise does not indicate bias.””

Manus McMullan KC has acted as lead advocate for the Panama Canal in all matters pertaining to the design and construction of the Third Set of Locks project, described as one of the biggest infrastructure disputes in the world, leading Christopher Lewis KC and Peter Land. The trio from Atkin Chambers have successfully represented the Canal in numerous proceedings and arbitrations, including the disputed 2021 Awards which were issued – and has been upheld – in favour of their client.

In the underlying arbitration Manus, Christopher and Peter were instructed by Nick Henchie of Vinson & Elkins. Karla G. Arias S. and Carlos Arrue Montenegro of the ACP’s legal department were a significant and integral part of the legal team. Andrés Jana of Jana & Gil argued Panamanian law. Manus and Christopher advised in relation to the appeal which was argued by Ed Mullins of Reed Smith supported by Jose Astigarraga and a team from Vinson and Elkins including Jim Loftis.

You can read Global Arbitration Review’s coverage of the US Appeals Court’s judgment here (behind subscriber paywall).

Details on some of the other disputes can be found here:

Manus McMullan KC, Christopher Lewis KC and Peter Land win again for the Panama Canal Authority

Manus McMullan KC, Christopher Lewis KC and Peter Land help to secure US$272m for the Panama Canal Authority

Manus McMullan KC and Peter Land in win for the Panama Canal Authority

Manus McMullan KC Lead Advocate in win for Panama Canal Authority

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